Principal Issues: [TaxInterpretations translation] What is the Canada Revenue Agency's policy regarding the issuance of T4A slips when fees in excess of $500 are paid?
Position: The Canada Revenue Agency will not insist on the issuance of a T4A in the situations listed in Guide RC4157. Nor will it require a T4A to be issued in the following circumstances:
(1) where the payment made is less than $500, provided no tax is withheld in respect of the payment;
(2) where services are rendered to an individual, in a personal capacity, by a professional or other person engaged in a trade, or where the services are rendered for the repair or maintenance of an individual's principal residence.
Reasons: Canada Revenue Agency policy.
2007-026251
XXXXXXXXXX Lucie Allaire,
Advocate, CGA, D. Fisc.
June 2, 2008
Dear Sir,
Subject: Requirement to file T4A slips
This is in response to your letter of December 11, 2007 requesting our opinion regarding the requirement to file T4A slips pursuant to subsection 200(1) of the Income Tax Regulations (the "ITR") in respect of fees in excess of $500 paid to professionals or subcontractors. In that regard, you wish us to consider various scenarios that you have submitted.
Unless otherwise indicated, all statutory references herein are to the provisions of the Income Tax Act (the "Act").
Our Comments
The situation described in your letter is an actual situation involving taxpayers. As stated in paragraph 22 of Information Circular 70-6R5 of May 17, 2002, it is our practice not to issue written opinions regarding proposed transactions otherwise than by way of advance rulings. Furthermore, when it comes to determining whether a completed transaction has received appropriate tax treatment, that determination is made first by our Tax Services Offices. However, we can offer the following general comments that we hope may be helpful to you. These comments may, however, under certain circumstances, not apply to your particular situation.
Under subsection 200(1) of the ITR, every person who makes a payment described in subsection 153(1)- including fees, commissions or other amounts for services - must file an information return in prescribed form (T4A slips and the corresponding T4A Summary), unless such a return has been made under section 202, 214, 237 or 238 of the ITR. This obligation must be complied with even if no deduction or withholding tax is made in respect of the amounts paid.
In fact, the tax provisions related to the requirement to file a T4A are drafted in extremely broad terms and apply to any person, whether a corporation or a self-employed person, who pays fees in excess of $500 to a recipient, regardless of whether the recipient is a self-employed person, a corporation or a partnership. Furthermore, there is nothing in the Act or the ITR that restricts the use of T4As to employment income or employment related benefits.
However, the Canada Revenue Agency (the "CRA") will not insist on the issuance of a T4A in the situations listed on page 4 of Guide RC4157, Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary. CRA will also not require a T4A to be issued in the following circumstances:
- Where the payment made is less than $500, provided no tax is withheld in respect of the payment; and
- Where services are rendered to an individual, in a personal capacity, by a professional or any other person engaged in a trade, or where the services are rendered for the repair or maintenance of an individual's principal residence.
Furthermore, subsection 237(1.1) specifies that every individual must provide the individual’s Social Insurance Number to the person required by the ITR to file an information return and that every other person or partnership must do the same with their business number. In addition, paragraph 237(2)(a) adds that every person required to file an information return must make a reasonable effort to obtain the person's social insurance number or business number from the person or partnership. In that regard, Information Circular 82-2R2 - Social Insurance Number Legislation that Relates to the Preparation of Information Slips provides additional guidance. Finally, the issuance of a T4A is not dependent on obtaining a tax number.
These comments are not advance income tax rulings and, as stated in paragraph 22 of Information Circular 70-6R5 dated May 17, 2002, are not binding on us.
Best regards,
François Bordeleau, LL.B.
Manager
Business and Partnerships Section
Business and Partnerships Division
Income Tax Rulings Directorate.